Stagnant wages and rising home prices lower consumer optimism
If Dorothy from The Wizard of Oz is to be believed, there’s no place like home. That may be true, but unfortunately, more Americans are beginning to feel less and less optimistic about the prospects of owning a home.
According to Realtor.com, there was a 1.7-point drop last month in consumer optimism about owning a home. This drop was likely brought on by stagnant wages and rising house prices. Fannie Mae’s monthly Home Purchase Sentiment Index fell to 81.5 points in January from 83.2 points in December (the scale ranges from -36.5 to 163.5).
Of the survey’s 1000 respondents, only 31 percent said it was a good time to buy in January and 12 percent answered that their household income was significantly higher than it was a year ago. In December, 15 percent of respondents said their income was significantly higher than a year ago.
However, there is some good news. For the fifth straight week mortgage rates fell. That, combined with increasing rents, might just make buying a home both more affordable and more attractive.